Progress thread: My first two deals and beyond

[danoodle]

Just thought I'd add, something did come up today! Apparently I need a whole new gas line but hopefully it will be $500 or less. They just have to connect the furnace and water heater and should only be about 20 feet of pipe.

I also discovered an amazing product called GARDZ which helps seal wallpaper to walls. Instead of spending hours/days scraping or steaming wallpaper, we just applied the GARDZ and voila! Paper feels very tight against the walls/ceilings now. We are going over it with oil-based kilz, however, just to be safe. Then knockdown then paint. Knockdown hides a lot of imperfections! Glad we didn't have to take down all that paper!

 

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[squall74]

If you don't mind can you put the total amount of mortgages and cashflow for all your properties? Google docs is unreadable for me and I found this thread a great read. Congrats on your progress! Being from Hawaii I'm surprised at the prices there in Kansas.

 

[danoodle]

As of right now I have $2100 gross rent coming in and paying $246.42 in mortgage payments. I'd estimate $1500 or so net minus the $246 is around $1250 positive cash flow per month.

I'd say I have around a week left until the yellow house is finished! Updated numbers can be found here. I'm really shooting for April 1st, but it's going to be hard since I am doing all the work and haven't heard from my worker since he cracked 3 ribs and punctured a lung after falling hard on the concrete. Thankfully not on my property! It was while he was taking a walk with his wife and slipped in some mud. If he comes back and if my friend helps these next few days, I think we'll make it for sure! Costs are going well, so far just over 45k. I'm planning on selling it at just under 100k so that would be a very nice profit! We'll see if it sells though....

 

[danoodle]

Another quick update! I made an offer for a house and they accepted; we would close in 30-45 days since it is a HUD home. I will post pics and info later.

I promised my wife I'd be home by April 4th, so the yellow house has to be finished by then. Been working until midnight almost everyday for the past couple weeks. My worker came back! He put in some hours yesterday and will continue to help me these final days. Things are looking good!

Oh, and last Sunday I almost lost my eye to a crazy, one in a million chance involving a finish nailer. I was nailing in quarter round and somehow the nail bent itself, ricocheted off the wall and hit me in the nose about an inch from my eye! I never thought a finish nailer could be so dangerous....needless to say, I am now wearing eye protection basically all day.

 

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[danoodle]

I figured I would post an update to this thread since it has been awhile. I still have yet to sell the yellow house. I recently completed all the requirements for my realtor license so I hope that listing the house (with myself of course) will help to sell it and I won't have to give up the entire commission. I didn't think it would take this long to sell, but there are a lot of foreclosures on the market and it seems people aren't able to get financing like they used to...

I did take possession of the "Brown house" about a month ago. I personally haven't done hardly any work on it and am practicing my delegation skills and let me tell you, it is quite nice. I am hoping to have it fixed up by August 1st and have a renter lined up already. They are actually the renters I have in my first house I fixed up, and we are going to move into that house.

I am also in discussion with a guy selling a mobile home park. It has 17 lots, 10 currently owner occupied, with 1 ready to rent and another that can be fixed up. He wants 100k, the gross income is 27k, net I'd say 10-15k. He's willing to do 25k down and seller finance the rest. We'll see if the deal goes through, it will be my first experience in commercial real estate if so! I really need the yellow house to sell for the down payment though. That's about it for now, other rentals are still going well. I was able to rent out the college house for next school year and they are paying upfront for the year like the last students.

 

[DeletedUser394]

Must. Move. To. Midwest. Cheap. Real Estate.

haha, damn, can't even get a 1 bedroom condo for $100k over here, never mind an entire mobile home park.

Dumb question, but with houses that go for only $21k, why doesn't everyone own a home?

 

[danoodle]

Dumb question, but with houses that go for only $21k, why doesn't everyone own a home?

I've often wondered it myself, considering I have tenants paying way more rent than would be a mortgage. I figure it's a combination of things.
-Most of the cheap homes are far from move in ready and require a lot of work.
-This is definitely a "rental" town and a lot of people probably don't have the cash/credit for even these cheap homes.
-The people with money/credit tend to buy the "nicer" homes

There are probably many more reasons, but also, not a lot of people choose to live in Kansas either...Less than 1% of the people in the US actually live in Kansas...

 

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[verial]

Dumb question, but with houses that go for only $21k, why doesn't everyone own a home?

I move like every year. Of course I could rent out my home, but being a landlord is not exactly passive and you're likely to be sued on-and-off. I also would prefer not to hire an "employee" who plays the landlord. I want freedom -- that's why I don't have a house.

 

[DeletedUser394]

I move like every year. Of course I could rent out my home, but being a landlord is not exactly passive and you're likely to be sued on-and-off. I also would prefer not to hire an "employee" who plays the landlord. I want freedom -- that's why I don't have a house.

Valid reasons, but I'd say you're in the minority, wouldn't you agree? Most people never do anything, never go anywhere, etc.

I enjoy moving around too, but I'll be buying up real estate and outsourcing it to property managers in every location I visit. I don't mind delegating tasks to competent people that are more than capable.

 

[danoodle]

Quick update: So apparently, I was supposed to meet with the guy this week about the mobile home park, and I just found out that he died on Saturday...I mean, he was 82 and all, but it was still quite unexpected. We'll see how this unfolds...

 

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[Money mania]

Wow, I was reading through your posts, very good job so far with the RE. Looks like you are finding your way, good luck with all your success.

 

[AnneC]

Holy cow! That is crazy about the MHP guy. I meant to check in with you for an update, but it's been a little crazy here. If it starts to pan out, let me know...

 

[danoodle]

I have a tentative accepted offer of 75k on the park. She is willing to sell me a small vacant lot and a gutted house with a new roof for 5k. Would be a LOT of work but I may have to pick that up as well. Have a meeting with my banker on Wednesday, we'll see how it goes!

 

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[danoodle]

WOW is all I have to say. Here's a lesson on why you should always DYODD and not trust someone else's word, even a banker. I talked with my banker and he said he'd lend me the money and we discussed the terms. I asked him about zoning and he thought it was fine since it had been a mobile home park for over 30 years. LUCKILY, I met with my other mentor today and he's the one that rementioned zoning and that it is actually a residential non-conforming use. Which basically means I CANNOT add anymore homes to the park. I called a few people and, sure enough, he was right. He also doesn't think it will ever be approved to be a mobile home park. The seller and I are going to talk with the zoning people tomorrow, but I think it will fall through. Just wanted to share because it goes to show why you must DYODD.

Also I felt really bad because after I got off the phone with the seller (who is a recently widowed elderly lady) I did my phone trick and I heard her say "Oh no no no no, God please..." before she hung up. Which means I am definitely the only person interested and she is highly motivated. I would just feel terrible taking advantage of a little old lady although I know this is the perfect chance to strike some kind of a deal. There is just so much risk involved, I'd probably cut my offer in half at this point. Any thoughts on the matter are appreciated!

 

[Yankees338]

Awesome thread! I just read through the whole thing... Thanks for sharing.

Has anything new happened on the MHP front? That was a pretty crazy turn of events.

 

[danoodle]

Actually a couple things have happened. I am signing a contract to buy the MHP, a fixer upper house and a random lot on Monday for 70k. I am actually gonna partner just on the fixer upper house with my mentor since he wants half of the garage for storage. I don't care too much about the house or garage, but I know partnering with him would be a smart move and possibly open the door to bigger future deals with him. The MHP will be my first adventure into commercial real estate and there is a lot of work to do. I know if I can get the park fixed up and to full capacity and running smoothly, it will be a great investment!

The only thing I am concerned about is my reputation. The town is divided between the good landlords and true slumlords. I am trying to make a good name for myself. If I can get the park turned around and looking good, people may look good upon me although I know I may always be known as "that mobile home park guy"...

 

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[andviv]

Very nice thread.

I am renaming it to "Progress thread: My first two deals and beyond" as you had requested long ago (sorry, just saw this one today thanks to you).

About the MHP, find out what zoning is accepted.

For example, have you considered taking the MHP and re-develop half of it in some other way? Is a self-storage a possibility and is there a need for that?

If a self-storage property is a real opportunity, you must contact "Around the World" and discuss details, but that usually makes sense in areas where people have a lot of crap and no place to keep it.

About the house for sell.... How would the rents be? What if you rent it and sell it as an investment to some local investor? It would be a perfect turn-key solution for them, they simply close on it, and it comes with a renter, so no headaches for the new buyer.

 

[andviv]

Also, forgot to ask... any multi-units in your area? if so, have you looked at the price per door? rents?

It would be a good time to keep those figures in mind, so you can spot the opportunity when it appears.

 

[danoodle]

About the MHP, find out what zoning is accepted.

Here's the scoop on the mobile home park on my non-monetized blog if that's ok to post. Basically it is zoned R1 residential and is currently in non-conforming use. They want it to conform and are phasing it out; they said the only possibility is to appeal the decision (which most likely won't change anything) or apply for the mobile home zoning (which is also not very likely). I think the time has come for this park. It is a very nice piece of land, though, right on a public dam with fishing and my mentor said he would even pay 30k just for the land. So there is still potential opportunity, like ride it out until it dies then subdivide and sell to builders or something. Self-storage would be nice and I hear you can even automate it with kiosks. I have considered it as well as billboards and, of course, mobile home parks.

About the house for sell.... How would the rents be?

I am supposed to get an offer on the house today or tomorrow so I'm hoping it will go through! I could rent it out for probably around $800 and my loan payment is only $246.42 so it would definitely cashflow. Not necessarily in a hurry to sell, but it would be nice as a large family would most likely rent it, and I would hate to see a newly renovated house get torn up.

Also, forgot to ask... any multi-units in your area? if so, have you looked at the price per door? rents?

There are some multi-units around here and I have looked into it some. Would not be a bad return depending on the price. I have focused solely on SFHs that are dirt cheap and fixer-uppers and plan to only focus on 2 bedrooms or less, but I'm sure the return would be even greater on multi-units. If/when this house sells, I am hoping to go in on an apartment complex with a friend in the town where I went to college. Would definitely be lower cap rate, but very stable and housing is always in high demand close to the campus. I am definitely keeping an eye out and even just got my realtor's license so I hope it will open up even more opportunities! At the very least, I will get half the commission when purchasing future homes...

 

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[andviv]

on my non-monetized blog if that's ok to post.

Of course it is ok to post, you have contributed already, so no issue here.

Basically it is zoned R1 residential and is currently in non-conforming use.

What is the lot size?

Zoning R-1 meaning 1 SFH per acre? (what is the minimum lot size per SFH in this area?)

I could rent it out for probably around $800 and my loan payment is only $246.42 so it would definitely cashflow.

I'd rent it if the offer does not show up.
I'd rent it month-to-month so a new buyer can decide what do with it, keep the renters or move in. Adds an attractive point to the mix, now it meets two markets, home owners and investors.

I have focused solely on SFHs that are dirt cheap and fixer-uppers and plan to only focus on 2 bedrooms or less, but I'm sure the return would be even greater on multi-units.

The only reason I mention it is because I am a believer of having all my eggs in one basket and take care of the basket with everything I got.... less roofs to take care, less trips to collect rent, etc etc. But you are focused, so I don't want to become a distraction from what is working for you.

I am hoping to go in on an apartment complex with a friend in the town where I went to college.

How far away?

Remote land-lording is a common challenge for most people (actually, can't recall too many people that have made it work...)

 

[danoodle]

Sorry, I didn't realize you posted this! Quick update: I got an offer on the house and I accepted! Just has to pass the inspection and appraisal and I'll be good to go. I also just closed on the small deal with my mentor. I have learned so much already just working with him, even on this small deal. We have discussed many ideas on how to move forward, so we'll see what happens there. Things are looking up! Not sure what my next deal will be, but I'm always keeping a sharp eye.

What is the lot size?

Zoning R-1 meaning 1 SFH per acre? (what is the minimum lot size per SFH in this area?)

It's a little over 2 acres with 15 units. It is zoned residential and is non-conforming and they want to get it to conform by phasing it out and not allowing homes to be added. I wanted to fill the park back up and get the cashflow going, but this makes it a dying entity. The only way I would purchase it is at a steep discount.

I'd rent it if the offer does not show up.
I'd rent it month-to-month so a new buyer can decide what do with it, keep the renters or move in. Adds an attractive point to the mix, now it meets two markets, home owners and investors.

That's a good idea and if the offer falls through for whatever reason, I'll consider it!

The only reason I mention it is because I am a believer of having all my eggs in one basket and take care of the basket with everything I got.... less roofs to take care, less trips to collect rent, etc etc. But you are focused, so I don't want to become a distraction from what is working for you.

Not a distraction at all. I'm always looking for new opportunities!

How far away?

Remote land-lording is a common challenge for most people (actually, can't recall too many people that have made it work...)

It is about an hour and 45 minutes away. My friend would be able to manage it himself and I occasionally go to the town to hang out with people so I could help as needed. I believe RealOG has many properties out of state and has success in managing them. I believe the key is in finding a good property manager.

 

[tchandy]

Sounds like a great deal. I have properties in other states as well and managed by PMs. Where in Kansas are you located? I just moved to Leavenworth.

 

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[NJRealEstate]

How far away?

Remote land-lording is a common challenge for most people (actually, can't recall too many people that have made it work...)

David Lindahl who now is also a guru but owns over 7000 units across the country, Rickson9 on this forum, and i am sure some plenty of others. the key seems to me to be strong PM, maybe some who rent remotely could enlighten us on the pros/cons of remote ownership and how they select their pm, what sort of interviews they conduct?

 

[andviv]

the key seems to me to be strong PM

Oh, I guarantee it... this IS the key.

When my properties were under my good PM, they were doing great. When I lost this PM and started going through a bunch of bad one, my business nose-dived in no time flat.

 

[NJRealEstate]

When my properties were under my good PM, they were doing great. When I lost this PM and started going through a bunch of bad one, my business nose-dived in no time flat.

how did u find the first pm? what are the key differences between good and bad? anything you learned from the contrast that you would look out for in the future? if you were getting into rentals again how would you pick your PM, what would you do differently than you had in past experiences? Where your pms IREM grads, or NPMA or some other national organization that certifies property managers?

 

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[andviv]

Responsive. That was the key.

They pick up your calls right away. And your tenants' calls.

Good communication, both verbal and writen.

I found the good one as a referral. The others were usually realtors that I just called.

No certs, just somebody organized and responsive.

 

[roc]

Hey Dan, when do you charge a late fee for rent. Roc

 

[danoodle]

Hey Dan, when do you charge a late fee for rent. Roc

Ummm, when they are late in paying the rent? lol I usually give a couple days grace period and even have given a week extension if they are keeping in good communication with me and not trying to avoid me.

I've been hesitant to give an update but here goes. I still have not sold the damn yellow house! I must be the worst "flipper" ever! If it doesn't sell in another couple months, I will, unfortunately, rent it out.

We fixed up the garage that came with the 5k house I mentioned before and even have someone renting out half of it for $50 a month. We sold a bunch of the crap in it and made $500+ bucks. We are still not moving on fixing up the house just yet. Would probably be a 20-25k project and isn't a priority right now.

I acquired another house with a partner back in November, call it the "shed house". It is actually not that great of a purchase and we are holding off on it as well. 22.5k purchase, 10-15k repairs and will rent for $600-650 when we get around to it.

Bought a cheap, crap house in December for just over 6k that I call the "Cat house". It is in a pretty nice neighborhood with mostly "older" folk as the neighbors. Very quiet. My partner and I are currently working on it and it needs quite a bit of work. I am expecting around 10-15k in repairs and will rent it out for around $450.

Also am closing on another house in February with my partner and will attempt to fix and flip it. Considering I still haven't sold the first fix and flip attempt, we'll see how it goes. I think it is a winner, though, and may even have a buyer lined up already. Bought for 19.9k, expect around 10k repairs, and hope to sell it for 60k. I am gonna say for the record if it does not sell fast at a price of 50k, I will probably go crazy. House prices are crazy in this town though.

Has been a wild ride! I don't really want to keep purchasing these cheap-o houses long term and am looking toward the future to apartments or other commercial RE/low maintenance businesses. My goal is still 50k net cash flow per year and am getting there! We'll see what the future holds!

 

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[danoodle]

I know this is an old thread, but I wanted to update it in my attempt to contribute more to this forum. As of right now, I have 11 houses and am closing on a 4-plex early december which will be my first dive into multifamily. I have sold all my attempted flips at a profit. Three were good but one was barely profitable and not worth the time and effort involved. I have only had to kick out 1 renter so far and she even moved out on her own accord. I have learned so much in regard to property management and have a pretty good system setup at the moment - I do all the managing myself.

One of the biggest issues I have is switching from a handyman mindset to an investor mindset. I still do all the work myself for the most part and I know it is not the best use of my time, but it is hard to give up control in this area for some reason.

I moved back to the town where all the houses are back in May of this year. For three years I lived in a town over 1.5 hours away and had to go back and forth for those 3 years which really impacted how much work I could get done. I have started using my realtor license for other people instead of just my own purchases now that I have moved back, and it has definitely taken away from the amount of work I can get done. It has been a nice boost of income, but I really need to start hiring out the work now that my attention is divided.

Also I had a kid in the meantime who is now 14 months old so that has been a huge factor on how I spend my time. Not trying to make excuses, but if you are single and/or childless, you don't realize the amount of freedom and time you have because it is 100% your own. Don't let it go to waste!!!!

If anyone has any questions or anything, I am more than happy to offer advice in any way I can!

edit: It so funny reading some of my earlier posts. I really didn't know what the hell I was doing, but I dove right in and now what seemed scary is just another day for me. Goes to show how important taking action is!

 

[danoodle]

We closed on the 4-plex today! Final price came out to be $14,949.85. The units should rent for $450 each and I expect to have to put in around 30-40k to get it fixed up. This will be my first multifamily property so we will see how it goes! If people are interested I will post the progress/end results and final numbers and whatnot. I have included a few pics as well.

Edit: I misread the settlement statement, it didn't include the earnest money so final total purchase price was $15,449.85